Correlation Between WESTFIELD RETAIL and Tencent Music

Can any of the company-specific risk be diversified away by investing in both WESTFIELD RETAIL and Tencent Music at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining WESTFIELD RETAIL and Tencent Music into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between WESTFIELD RETAIL TR and Tencent Music Entertainment, you can compare the effects of market volatilities on WESTFIELD RETAIL and Tencent Music and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in WESTFIELD RETAIL with a short position of Tencent Music. Check out your portfolio center. Please also check ongoing floating volatility patterns of WESTFIELD RETAIL and Tencent Music.

Diversification Opportunities for WESTFIELD RETAIL and Tencent Music

0.0

Correlation Coefficient

WESTFIELD RETAIL  Tencent Music

Pay attention - limited upside

The 3 months correlation between WESTFIELD and Tencent is 0.0. Overlapping area represents the amount of risk that can be diversified away by holding WESTFIELD RETAIL TR and Tencent Music Entertainment in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tencent Music Entert and WESTFIELD RETAIL is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on WESTFIELD RETAIL TR are associated (or correlated) with Tencent Music. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tencent Music Entert has no effect on the direction of WESTFIELD RETAIL i.e., WESTFIELD RETAIL and Tencent Music go up and down completely randomly.

Pair Corralation between WESTFIELD RETAIL and Tencent Music

If you would invest  912.00  in Tencent Music Entertainment on February 10, 2024 and sell it today you would earn a total of  328.00  from holding Tencent Music Entertainment or generate 35.96% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Flat
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

WESTFIELD RETAIL TR  vs.  Tencent Music Entertainment

WESTFIELD RETAIL

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days WESTFIELD RETAIL TR has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of rather sound basic indicators, WESTFIELD RETAIL is not utilizing all of its potentials. The current stock price tumult, may contribute to shorter-term losses for the shareholders.

Tencent Music Entert

Risk-Adjusted Performance

11 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Tencent Music Entertainment are ranked lower than 11 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Tencent Music reported solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with WESTFIELD RETAIL and Tencent Music

The main advantage of trading using opposite WESTFIELD RETAIL and Tencent Music positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if WESTFIELD RETAIL position performs unexpectedly, Tencent Music can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Tencent Music will offset losses from the drop in Tencent Music's long position.

The idea behind WESTFIELD RETAIL TR and Tencent Music Entertainment pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Volatility module to check portfolio volatility and analyze historical return density to properly model market risk.